Monday, February 19, 2007

If You Pay For Credit Repair, You Haven’t Learned Anything Yet!

The Shearing of the Sheep


Don’t get ripped off again for this simple process.


I can’t say I’ve really looked into it, but if someone wants to charge you money to repair your credit, here’s what you do. After you tell them to take a flying leap, that is.

First, find a credit union that will take you as a member. You have to be a member of their charter population, but you can usually find one that has the geographic area you live in, or something like that, as a population. There is a Credit Union that will only take people who work for the Chicago downtown post office. That’s their charter population. Some are less specific. Mine, in addition to numerous specific companies in the area, will also take anyone who lives within 5 miles of their main office. That’s what you’re looking for if you don’t have a Credit Union at your job, church or social club.

Next, take a $500 secured loan from a credit union and deposit the $500 in a savings account with the credit union as the security. If they keep the money and freeze the account, you should be able to get the loan even if your credit is really in the toilet. Inquire about their credit reporting practices. This loan will do you no good if they don’t report it to a credit agency like TransUnion or Experian. If you have to, find out if they will report as a special case. Often institutions will do that upon request. Sometimes, institutions only report loans with a period OVER one year. While credit cards often report transactions monthly, credit cards are what got you into trouble in the first place. And there are cheaper ways to do the same thing you are trying to do with a credit card.

Finally, without ever touching the money in the account (to spend it, that is,), pay back the loan. If you have to use some of the money in the savings account to pay off the loan, that’s not best but that’s OK. Even of the account is frozen, they should let you make payments on the loan as long as the savings balance is more than the total of the loan plus the total interest on the loan. Best if you don’t ask to do that until at least ½ the loan is paid. And not more than one or two payments over the course of the loan. Otherwise you’re just wasting everyone’s time.

Two or three things happen here. For the $15 you wasted in interest on the loan, you have $500 in the bank. Also, there is a report of all the timely payments you made on the loan at the credit bureau for your new creditors to see. And your credit score will go up.

You can also do this with a secured credit card. But be careful. Make sure you know ALL the hidden charges of that credit card. You will probably have to pay interest charges far in excess of the Credit Union account so unless you really need the credit card to buy things, don’t fool around with it. Stick to secured Credit Union loans for the first few thousand dollars. If you can’t build up a few thousand dollars in the bank, you’ve got no business buying things with a credit card. If you can’t build up a few thousand dollars in the bank, how are you ever going to buy a car? The difference in buying a car, no money down with bad credit vs. buying a car with just $2500 down can be double the price. Do you really want to pay $25,000 for a $12,000 car? Do you really want to, at the end of 6 years, have a worthless car on which you still owe $8000? Sure you can roll that over into the next car. I knew a co-worker who did that a few times. He wound up with a dead Nissan Pathfinder with 240,000 miles on which he still owed $14,000!!!

In the same way that big, beautiful, brightly lit, flashy casinos are not built by letting the players win more than they lose, big, beautiful, brightly lit, flashy car dealerships are not built by selling cars at rock bottom prices. Nor by financing cars at rock bottom prices. Nor by selling auto insurance at rock bottom prices. Nor by selling rust proofing or finish protection at rock bottom prices. Nor by selling aftermarket radios, DVD players, leather seats, or heated seats at rock bottom prices. You have to shop and dicker over every one of those items. Or if you don’t you can forget about taking a vacation or having Christmas this year. Or any other year.

You can also forget about Christmas and the vacation if you let someone talk you into Credit Repair. Just like Santa, the Easter Bunny and the Tooth Fairy, there ain’t no such thing as Credit Repair. - © 2007The Chewed End All rights reserved.

1 comment:

Brian Brass said...

Thanks for commenting on my article Credit Repair Scams...Good and Bad Credit. Unfortunately, I think you missed the point. There are a number of ways to improve your credit. The methods discussed in your article are fine but only represent a small part of credit repair - establishing new credit. Many people with poor credit do not have any delinquencies. You can improve your credit without adding new credit lines. Finally, another major point in my article was the fact that 3rd-Party companies will sell seasoned tradelines to willing prospects for a very inflated price. You can improve your credit score with the help of a knowledgable professional.

BRIAN BRASS
www.GreatRateTeam.com

Seamus O'Bròg is an artist and freelance writer who tries to turn life's irritations into life's lessons.

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